U.S. President Barack Obama on Saturday signed into law tough new sanctions targeting Iran’s central bank and financial sector, AFP reported.

The measures, meant to punish Iran for its nuclear program, were contained in a $662 billion defense bill, the report said. The bill was approved several weeks ago.

The sanctions are meant to hit Iran’s oil sector and require foreign firms to make a choice between doing business with Tehran’s financial sector and central bank or the U.S. economy and financial sector.

Foreign central banks which deal with the Iranian central bank on oil transactions could also face restrictions, AFP noted.

Obama signed the bill in Hawaii where he is on vacation, at a time of rising tension with Tehran. On Tuesday, Iran threatened to stop the flow of oil through the Strait of Hormuz, the waterway through which at least a third of the world’s oil must pass in order to get to markets in the West, if it became the target of an oil export embargo over its nuclear ambitions.

The U.S. subsequently warned Iran against closing the strait, saying “anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated.”

Iran has also threatened that it would fire long-range missiles during a naval drill in the Persian Gulf, but at the same time the Islamic Republic has stated that it is ready to rejoin EU-led talks with major powers over its nuclear program.